The Funding Souq credit team assesses each funding proposal based on the borrower’s ability and willingness to repay. We conduct and extensive due diligence across a number of parameters before making an credit decision.
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Credit Scoring
Credit Parameters
Financial Capacity
Our Credit Team carefully analyzes the financial performance of SME borrowers, considering various factors to evaluate their financial capacity. We thoroughly assess the borrower’s ability to generate revenue, effectively manage cash flow, and fulfill their financial obligations. Our analysis encompasses several key areas of focus, including:
- Income Generation.
- Cash flow Assessment.
- Profitability and Ratio Matrix.
- Liquidity Ratio Evaluation.
- Working Capital Management.
- Debt Repayment Capacity.
- Capital Structure.
- Cash Cover in Bank Statements.
Credit History and Risk
Assessing the credit history and risk profile of SME borrowers is essential to determine their reliability and creditworthiness. The Funding Souq Credit Team carefully examines the following areas to gain insights into the borrower's past credit behavior and assess associated risks:
- Review how well the borrower has repaid loans to Funding Souq and other financial institutions.
- Outstanding Debt and Facility Utilization.
- Considering credit factors specific to the borrower's industry that may impact their creditworthiness.
Owner Character and Commitment
Assessing the background of all SME owners (>5% shareholding) is crucial in understanding their level of dedication and responsibility towards the business. The Funding Souq Credit Team evaluates the following points related to owner character and commitment:
- Do shareholders have family based in the UAE?
- Do shareholders have children in school in the UAE?
- Do shareholders own property in the UAE?
- How much debt do shareholders have in the UAE? and how much has been paid off?
- How much equity have shareholders invested in the business since conception?
- To what extent are shareholders withdrawing funds from the business?
- What are the shareholder’s current credit bureau scores?
External Sources
Funding Souq conducts additional layers of due diligence to ensure the prospects are not advertised
outside the platform nor are they seeking funding on other platforms. Also, the firm uses a variety of
established private and public third parties to further supplement the internal risk analysis. These include:
- Sanction list screening softwares
- Credit Bureaus
Our Credit Team carefully analyzes the financial performance of SME borrowers, considering various factors to evaluate their financial capacity. We thoroughly assess the borrower’s ability to generate revenue, effectively manage cash flow, and fulfill their financial obligations. Our analysis encompasses several key areas of focus, including:
- Income Generation.
- Cash flow Assessment.
- Profitability and Ratio Matrix.
- Liquidity Ratio Evaluation.
- Working Capital Management.
- Debt Repayment Capacity.
- Capital Structure.
- Cash Cover in Bank Statements.
Assessing the credit history and risk profile of SME borrowers is essential to determine their reliability and creditworthiness. The Funding Souq Credit Team carefully examines the following areas to gain insights into the borrower's past credit behavior and assess associated risks:
- Review how well the borrower has repaid loans to Funding Souq and other financial institutions.
- Outstanding Debt and Facility Utilization.
- Considering credit factors specific to the borrower's industry that may impact their creditworthiness.
Assessing the background of all SME owners (>5% shareholding) is crucial in understanding their level of dedication and responsibility towards the business. The Funding Souq Credit Team evaluates the following points related to owner character and commitment:
- Do shareholders have family based in the UAE?
- Do shareholders have children in school in the UAE?
- Do shareholders own property in the UAE?
- How much debt do shareholders have in the UAE? and how much has been paid off?
- How much equity have shareholders invested in the business since conception?
- To what extent are shareholders withdrawing funds from the business?
- What are the shareholder’s current credit bureau scores?
Funding Souq conducts additional layers of due diligence to ensure the prospects are not advertised
outside the platform nor are they seeking funding on other platforms. Also, the firm uses a variety of
established private and public third parties to further supplement the internal risk analysis. These include:
- Sanction list screening softwares
- Credit Bureaus
Credit Scores
The borrower is assigned a risk band (A, B, or C) based on a credit score which is calculated by our proprietary credit score card. The table below outlines the different risk bands and their relative score.
| A | B | C |
|---|---|---|
| 90 to 98 | 54 to 89.99 | 26 to 53.99 |
The overall credit score is based on 4 main credit parameters and their respective weighting as outline below.
Credit Parameters
Weighting
(%)
Risk Score
Financial Capacity (out of 47 points)
47%
A: 44 points or more
B: 26 to 43 points
C: 14 to 25 points
Credit history and risk (out of 34 points)
34%
A: 31 points or more
B: 18 to 30 points
C: 6 to 17 points
External sources (out of 10 points)
10%
A: 7 points or more
B: 5 to 6 points
C: 4 to 5 points
Owner character and commitment (out of 9 points)
9%
A: 6 points or more
B: 6 to 7 points
C: 2 to 5 points